Working in Russia: watch out for the insurance holes

11.06.2013

Work visa come in three flavors: the foreigner under a quota, the foreigner in functions without quota and the Highly Qualified Specialist (HQS). The application procedure is lengthy for the first two categories (3-5 months in practice) and cumbersome: it involves various stringent medical tests which must be taken in Russia, prior to receiving the work permit. Some Western hospitals in Moscow have streamlined the tests and for a mere 400 Euro they will in 2-3 hours take samples of practically all body fluids, photograph your lungs and, of course, subject you to an interview with a psychiatrist who may ask your opinion on homosexuality. If you are determined to “go local” with the medical tests, take a good book with you so you can read while sitting it out in the queues.

A shining example of efficiency and hospitality is the HQS work permit. The only requirement you have to fulfill to be highly qualified is earning a salary of at least 2 million roubles (50,000 Euro). It is issued within 14 days. Your salary will be subject only to 13% personal income tax, no pension fund and medical insurance fund payments apply. And only when receiving the work visa in the Russian Consulate of your home country, you have to show only an HIV-test. And your employer is obliged to buy a private medical insurance, so there will be no sitting in queues if you need to visit a hospital. Beware of “insurance holes” though: “repatriation” may mean being brought back to Russia if you break your leg on the treacherous slopes of the French Alps, and for other, serious medical treatment (не дай Бог, may God forbid) you naturally want to go to a hospital in your own home country.

If your spouse is Russian, you may apply for the Holy Grail, the permanent residence permit (вид на жительство) and you will no longer need a work permit.

In all of these cases, you will need to sign a local, Russian employment agreement. Russian labour law is not particularly unfavourable for employees. Your termination notice is only two weeks, so “job hopping” is well facilitated. Within a month after your employment contract has terminated, you new employer should at least have applied for your new work permit.

But when you return to your home country after an assignment in Russia, you will have no labour history there, accumulated pension rights and all these achievements of the modern social welfare state which many Russians of the Soviet generation immediately recognize as “Communism” (with a capital C, the superlative of Socialism). Also worth considering are termination conditions. The Russian “golden handshake” (compensation for dismissal in case of redundancy) amounts to maximum three monthly salaries, more like a wooden stick. Therefore, if you are sent to Russia by a foreign parent company (or hired by a very progressive Russian company), it is “best practice” to preserve an employment agreement with the parent or group company and make pension fund, disability, unemployment and other insurance payments there. In Western Europe, entrepreneurs also fall outside this social system and must pay for all protection themselves. The Russian expat is essentially an entrepreneur as well, but with only one client: his Russian employer. And after being fired, you will find out that with all those insurances, you are not protected against being unemployed. The status of employee of a European company does give you such protection and, depending on the country involved, will cost around 10,000 Euro per year.